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Former professional in private equity and real estate, who's spent the last few years acquiring product management and development skills. Obsessed with value proposition, and drawn to un-sexy verticals. Love NYC, while always wishing I was in LA.

One nit pick though. I always cringe when "finally turn this into a real company" is used in a situation like this. Don't you think it's fair to say Nasty Gal was already a "real" company, and that the VC money provided an opportunity to turn it into a "larger" company in a faster period of time?

+1 on what @mgeller142 said. It doesn't mean they're not taking some risk by investing so heavily in growth and marketshare, but for the type of customers they're selling to it reasonable to expect multiple years of revenue in return for that initial CAC.

@mcarney I seriously doubt that they're actually getting 2.9%. Either Stripe cutting into their own fee or Kickstarter leveraging their own merchant account with a bank/processor for reduced fees would lower this number. In my prior job I approached Braintree to discuss migrating from piss poor legacy payments platform. With around $250k in monthly transactions they offered to lower the fixed rate from 2.9% to between 2.5% - 2.6%. This was at a time when they had just begun matching Stripe's then unique fixed pricing.

Through email Stripe also said a discounted fixed rate was possible, although we never reached the point of them quoting an exact number.

All this really goes to your point in this article and the prior one regarding Stripe's hard-to-rationalize valuation, around what a low-margin volume business it is. Even a high profile customer win like this might only move their revenue $10M - $15M with the discounted terms that were likely agreed to.

The Fab story is obnoxious enough on its own, but it's even more annoying for you to continue with the patently false narrative that it was worth, and sold for, only $15 million. Essentially, the brand name and likely some IP was sold for $15 million. The furniture business, Hem, which received much of their late stage funding was retained, and could end up returning all invested capital as stated by your own Michael Carney in the article that YOU linked to above. The word "Hem" doesn't even show up once in this article.

Again, Fab could easily be a poster child for VC backed excess and how trendy buzzwords can get people to ignore a business model you spend more to acquire a customer than can reasonably be made back in revenue over any reasonable timeframe. This doesn't mean that it's ok for you to be click-baity and factually incorrect when reporting on it.

I love Stripe, but have always felt their position was tedious. Although to be honest, I always thought it would be Square that got in their way. Both companies had/have near immediate account setup and simple flat rate pricing. It always seemed just a matter of time before Square would open an API to allow developers to integrate ecommerce sites and mobile apps with their platform, which would both have dramatically increased their processing volume and allow customers to better connect POS with online sales. Like so many other things Square has failed to act in a timely manner or at all.

Congrats to Stripe on having reached the point where such a raise was even possible. Just hope they haven't left themselves with too little room for error.

@paulcarr I'm not a fan of Secret personally, but agree with the initial point made by @AssafLavie. Israel has not tried to ban Secret. You'd have to have a majority of their lawmakers making such an effort to make such a claim. The article headline is clickbaity, and unnecessary. Simply state that ONE lawmaker has called for it's ban based on similar issues raised here in the U.S. There, done.

The amount of equity the two founders maintained is astounding, and very impressive. Would be interested to know about their initial bootstrapping and funding sources. Seems at the very least they would have needed some early operational debt, perhaps in the form of a secured credit facility or something.

While the comments have unsurprisingly devolved mostly into taking sides between Suster and Graham, your broader question concerning our expectations around speaking out publicly on topics that are contentious and may have negative business/financial repercussions is an important one. Thanks for taking the time highlight this angle on things.

I agree that this needn't detract from the friendships and ongoing social ties that arise from the in-person social side of using AirBnB. If you hit is off with a host, it's hardly a bother to exchange personal contact info to keep in touch.

@holmesdm I'd love to see more written on the comparable economics of these situations. As it stands, your cat's guess is as good as anyone's. For instance, what is the revenue and profits for a 500k viewer audience on HLN vs. YouTube?

@davepaz I think it's pretty clear that Uber is claiiming $90k, but that it excludes the operating expense of the car. For instance, fuel alone changes this number greatly. Say a driver does 50k miles a year in a vehicle getting 25 MPG paying $4 gallon for gas. That's an expense of $8k per year. This is before the special insurance and loan/lease payments for the vehicle. If they were honest and said the average driver makes $68k a year after expenses and before personal taxes, no one would be giving them a hard time. The problem is that they are going so far out of their way to act as the "savior" of drivers everywhere, that they're willing to spit out BS numbers.

I like what Uber's doing, and in general it is a superior experience. However, that should not give them license to syndicate misleading or flat out incorrect data about their company and it's impact on individual drivers and the economy at large.

@puck you don't think Uber knows what it costs to operate a car? They partnered with one of the largest private equity companies in the world almost exclusively to provide vehicle purchase and lease financing to the drivers. They can tell you how much is costs per mile/day/week/year to the penny in any zip code they're operating in.

@KenG the credit card cancellation technique does not always work. I know that for recurring subscriptions made online, they continued to work even after I declared a lost/stolen card with AMEX, and received a replacement with new CC number.

I wonder how Bitcoin and blockchain technology deal with recurring charges?

It would be great to see a follow-up piece discussing the type of endeavors or decisions companies can, or are likely, to make by postponing an IPO, that they might not want to if they were already public. It seems that in addition to how low interest rates are right now (cheap debt), that this is the other primary driver of such a decision.

Main stream corporations flush with cash during the worst of the downturn in 2009-2012 took on large amounts of insanely cheap debt (3-5%). To your point, it's simply now making it's way into the tech arena.

@mcarney this seems like an extension of the changes brought about by the likes of Yuri Milner when he allowed FB to avoid by a premature IPO by providing larger/longer-horizon funding than the current norm. Clearly debt is common for mainstream corporations, but I wonder how often they use it to delay an IPO?

@mcarney I'd be interested in an analysis how many people are positively impacted in the local ecosystem by Makers. I think they are an example of a full-stack startup as recently described by Chris Dixon (http://www.cdixon.org/2014/03/15/full-stack-startups/) and in an epic series of tweets from Balaji Srinivasan at a16z (http://storify.com/nikcub/balajis-on-full-stack-startups). They built proprietary tech on top of youtube, provided physical and human resources for creation/production of content, delivered monetization, etc. I think it's what has set them apart from others such as Machinima.

So, back to my question... For every dollar that goes into a company like makers for the creation/distribution of content, how much do you think gets paid out to entertainment specialists in the broader LA ecosystem (lighting, gaffers, writers, post-production, sound, etc.)? Contract work is the norm, so my guess is it's reasonably high, but love to see some actual ballpark numbers. I'd think it would be a positive story for the Makers and the LA.

For what it's worth I'm not actively in the industry or a Makers fanboy, but think it's worth highlight hybrid tech companies that may create or empower existing professions rather than simply destroy jobs and create a fewer number of elite positions for the well-schooled and technically inclined.

@worstall@FrankThagardHere's the thing... They don't have to follow behind a mule any more to get food, but they MUST now have the money to buy. While they have been relieved of a less than enviable job, they may not be equipped to take on the new replacement job. Say you're in your 40's when this happens, the odds are not in your favor that you'll be able to maintain or improve your economic position going forward. And this is all that matter since you must purchase everything now delivered as a service. Your children may benefit and the macro trends over decades and centuries may look great, but it has come at the cost of an individual's quality of life during the remainder of their lifetime.

A company that shifts direction rarely does so by immediately killing it's existing revenue streams. Rather it gradually migrates away and finds a way to get yield from it's existing infrastructure and capital investments. It would be behoove society if we also prioritized making better use of the human capital that is often left in the dust of technological innovation. I'm not saying we stop innovating, but simply that this should be a bigger part of the conversation as we go along. If innovation and technology is about solving problems, there's no reason we can't add this to the problem list when we do things.

The SSL fix didn't even show up in the App Store "Updates" pane. Had to click through on the link for more detailed information on Apple's website and FINALLY you see it as the very last bullet point. And worse they don't use the work "security" in the explanation.

Apple's usability still reigns supreme, but it is unfortunate that rely on this to keep consumers happy while not giving the same attentiveness to substantive issues like security.

Good article with plenty of insights, but I take issue with two things. One, seemed unnecessary to bring up the Arrington/Allen suit, and I'm not particularly keen on him to begin with. Two, calling any of this an OJ moment seems beyond dramatic in the most "inside the SV bubble" way possible. One really rich guy has re-organized several other just-rich guys. Two innocent people were not murdered in cold blood with a knife, nor will there be a nationally televised police chase.

Again, tons of meat and solid reporting in this article, which makes those things feel especially out of place not accretive.

This is interesting. I met another guy, Adil Wali, who was a co-founder at ModCloth who co-owns a dev shop in Mexico called Crowd Interactive. As I understood the story, Crowd Interactive came about as a way to provide development resources for ModCloth, but reduce some of the overhead by also taking on client contract work. The team in Mexico ended up being highly proficient and has continued on as an independent dev shop. I met several team members in NYC, and was super impressed. About two years ago they generously offered to let me work from their space in Colima and provide mentorship as I was learning to code - for free! They also host the annual Ruby on Rails conference for Mexico.

I have no ongoing relationship with Crowd Interactive, but think the story is relevant to what Andy Kieffer is doing in Guadalajara. Giving him the benefit of the doubt in terms of how he's treating local employees and partners, I think there's enough green grass in places like Mexico to still do well and do good. Best of luck to them.

@wtpayne Well for one, he stated that they had the ability to transfer/steal all of his money. These funds are not insured for such theft. I'd consider that a pretty significant impact. Additionally, imagine if the information had been collected, but not used until they went on a vacation, say out of the country. Having to access to communications (address books, email accounts, twitter, etc.) or money could leave you and your children stranded. Lastly, since they had already compromised one of the family day-to-day machines they could just sit there and eavesdrop, gathering more useful and damaging information over time.

They've been delivering value, but have also been dancing around a clear message describing when or why a potential customer/SMB would come to them. I've found myself fumbling for words on occasion when I'd point someone to Docstoc if they asked what they did. The acquisition of BestVendor following their creation of License123 really closed the circle on the value proposition.

It's not mentioned in the article, but a big revenue opportunity for them might be as a plug-n-play distribution platform for other things an SMB might need/want. For instance, SaaS solutions (one-off or bundled), professional services (bookkeeping, HR), etc. AMEX and Intuit could compete with them, or just save the money and use it to be affiliate fees for profit sharing to Docstoc. Not hard to imagine someone coming to Docstoc setup their store or restaurant and simply selecting additional bundled services at discount ( Google Apps for 6 employees, an Intuit POS system, etc.). It might have some parallels to Heroku's Add-on marketplace.

Love stories like this. 37signals is always heralded as the crowned prince of bootstrapping and autonomy, but they their attitude can be aloof at times and rigid. It's great to see examples of companies thriving under the constraints of bootstrapping and then leveraging VC money for what it's best at, growth and scaling of a product or service that has traction.

While your previously articles were thoughtfully written, I didn't find them particularly valuable or actionable. This one is universally helpful. There's no scenario where this wouldn't help improve the feedback cycle.

@Francisco Dao Many people live in a physical environment that have all of those things. In fact, isn't that high school for many people? Perhaps it's just that it's nearly impossible to wall yourself off on the Internet. In the physical world you can move into exclusive and/or gated communities, work in well-secured office buildings and vacation away from the rif raf.

I generally relate to your skeptical and sometime curmudgeonly take on things, but this feels like one of those rants about the glories of times past. Doesn't a simple game of telephone with a group of people demonstrate how quickly we lose the truth? I think the Internet simply magnifies what we as humans were already doing, while also making it more efficient for us to consume things as individuals (which happens to include a lot of the garbage you referenced).

@Hil_Davis excellent question. I agree with @mcarney 's discretion on the matter though. There are plenty of variable that could weigh on the overall success of the transaction.

Separately, I question many people's expectations around multiples for these type of companies. Because e-commerce stores leverage the internet there seems to be an assumption that they should trade at multiples similar to more pure play technology companies that sell software or deliver SaaS solutions. While these e-commerce platforms obviously leverage technology, they have more in common with the old-guard brick 'n mortar retailers than they do with Microsoft.

For starters software vendors and SaaS providers have relatively high costs related to upfront product development and then ongoing sales. However, the costs to deliver the software or SaaS solution to each additional customer is close to zero, which can lead to increasingly high margins over time for a successful product or service. While intelligent beauty certainly makes heavy use of technology, they're mainly repackaging existing software and libraries to serve a specific use-case (there are exceptions I'm sure where they are creating something new from scratch). This technology and the Internet allow them to avoid the overhead costs of brick 'n mortar retail, but they're margins still have long-term constraints. The cost of manufacturing the end product is out of their control, and likely won't decrease much considering they mostly sell high-volume mass produced goods.

So... they can increase volume, but margins improvement is difficult and ultimately limited. With that in mind, what multiples do you (@Hil_Davis / @mcarney ) think are appropriate? What are more comparable sectors?

@eringriffith It would be good to have a sense of proportionality with some of these numbers and stats. For instance, what is the total employment number to put the +2,200 tech jobs in 2Q13 against. While I think tech is important, I'm curious whether it actually makes a dent in employment in relation to entire ecosystem. I feel like the financial services industry adds and throws away this many jobs in an almost cyclical manner. Since I don't have any numbers at hand this is purely my own pondering...